Amitbhai and Narendrabhai Are in Partnership: Complete Accounting Solution for Trading and Profit & Loss Account and Balance Sheet
Introduction:
Amitbhai and Narendrabhai are in Partnership sharing Profits and losses equally. from the following Trail balance and Adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as on that date.
"In this updated guide, we provide a comprehensive accounting solution for Amitbhai and Narendrabhai's are in partnership. This includes detailed steps for preparing the Trading and Profit & Loss Account and Balance Sheet as of 31st March 2019. Recent updates include additional examples, enhanced explanations, and a clearer breakdown of complex concepts to help accounting students better understand the process."
Trail Balance as on 31st March 2019:
Debit Balance | Amount ₹ | Credit Balance | Amount ₹ |
Plant & Machinery | 2,80,000 | Capital A/c: Amitbhai | 3,50,000 |
Factory Building | 75,000 | Capital A/c: Narendrabhai | 3,00,000 |
Sundry Debtors | 28,700 | Sales | 1,80,000 |
Purchases | 85,500 | Bills Payable | 8,500 |
Bad Debts | 500 | Discount | 1,200 |
Sales return | 2,200 | Creditors | 38,500 |
10% Govt. Bond | 40,000 | R.D.D. | 2,700 |
(Purchased on 1st Oct 2018) |
| Bank Loan | 15,000 |
Import Duty | 1,800 |
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Legal Charges | 2,000 |
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Motive Power | 12,000 |
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Warehouse rent | 1,800 |
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Cash in Hand | 20,000 |
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Cash at Bank | 70,000 |
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Advertisement | 10,000 |
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(For 2-year, w.e.f 1st Jan 2019) |
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Salaries | 3,800 |
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Rent | 1,500 |
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Drawings: Amitbhai | 2,400 |
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Drawings: Narendrabhai | 3,200 |
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Furniture | 1,95,800 |
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Bills Receivable | 20,700 |
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Freehold Property | 41,000 |
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Total | 8,97,900 | Total | 8,97,900 |
Adjustments:
1. Stock on hand on 31st March 2019 was valued at ₹43,000.
- Effect: Show in Balance Sheet on Assets side and in Trading A/c on credit side.
2. Uninsured goods worth ₹8,000 were stolen.
- Effect: Show as a loss in Profit & Loss A/c on debit side and in Trading A/c on credit side.
3. Create R.D.D. at 2% on Sundry Debtors.
- Effect: Show in Profit & Loss A/c on debit side and deduct from Sundry Debtors in Balance Sheet.
4. Mr. Patil, Our Customer, became insolvent and could not pay his debts of ₹500.
- Effect: Add to Bad Debts in Profit & Loss A/c and deduct from Sundry Debtors in Balance Sheet.
5. Outstanding Expenses - Rent ₹800 and Salaries ₹300.
- Effect: Add to the respective expense in Profit & Loss A/c and show as liability in Balance Sheet.
6. Depreciation Factory Building by ₹2,500 and Furniture by ₹1,800.
- Effect: Show depreciation in Profit & Loss A/c on debit side and deduct from the respective asset in Balance Sheet.
Final Account: In the Books of Amitbhai and Narendrabhai
Trading A/c And Profit & Loss A/c for the year ended 31st March 2019:
Particulars | Amount ₹ | Amount ₹ | Particulars | Amount ₹ | Amount ₹ |
To Purchase | 85,500 |
| By Sales | 1,80,000 |
|
(-) Purchase Return | 2,000 | 83,500 | (-) Sales Return | 2,200 | 1,77,800 |
To Import Duty | 1,800 |
| By Goods were stolen |
| 8,000 |
To Motive Power | 12,000 |
| By Closing Stock |
| 43,000 |
To Gross Profit c/d |
| 1,31,500 |
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|
Total | 2,27,800 |
| Total | 2,27,800 |
|
To Bad Debt (T) | 500 |
| By Gross Profit b/d |
| 1,31,500 |
(+) Bad Debt (A) | 500 |
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(+) R.D.D. (A) | 564 |
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| 1,564 |
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(-) R.D.D. (T) | 2,700 | -1,136 |
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To Legal Charges |
| 2,000 | By R.D.D. |
| 1,136 |
To Warehouse rent |
| 1,800 | By Interest receivable |
| 2,000 |
To Advertisement | 10,000 |
| By Discount |
| 1,200 |
(-) Prepaid Advertisement | 8,750 | 1,250 |
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To Salaries | 3,800 |
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(+) Outstanding Exp | 300 | 4,100 |
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To Rent | 1,500 |
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(+) Outstanding Exp | 800 | 2,300 |
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To Depreciation: |
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Factory Building | 2,500 |
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Furniture | 1,800 | 4,300 |
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To loss on goods were stolen |
| 8,000 |
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To Net Profit: |
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Amitbhai | 56,043 |
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Narendrabhai | 56,043 | 1,12,086 |
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Total | 1,35,836 |
| Total |
| 1,35,836 |
Balance Sheet as on 31st March 2019:
Liabilities | Amount ₹ | Amount ₹ | Assets | Amount ₹ | Amount ₹ |
Capital A/c: |
|
| Plant & Machinery |
| 2,80,000 |
Amitbhai | 3,50,000 |
| Factory Building | 75,000 |
|
Narendrabhai | 3,00,000 | 6,50,000 | (-) Depreciation | 2,500 | 72,500 |
(-) Drawings: Amitbhai 2,400 Narendrabhai 3,200 |
|
| 10% Govt. Bond (Purchased on 1st Oct 2018) | 40,000 |
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| (+) Interest Receivable | 2,000 | 42,000 | |
5,600 |
|
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| ||
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| Bills Receivable |
| 20,700 |
| 6,44,400 |
| Cash in Hand |
| 20,000 |
(+) Net Profit | 1,12,086 | 5,32,314 | Cash at Bank |
| 70,000 |
|
|
| Furniture | 1,95,800 |
|
Bills Payable |
| 8,500 | (-) Depreciation | 1,800 | 1,94,000 |
Creditors |
| 38,500 | Freehold Property |
| 41,000 |
Bank Loan |
| 15,000 | Debtors | 28,700 |
|
Outstanding: Rent Salaries |
|
| (-) Bad Debt (A)
| 500 28,200 |
|
800 |
| (-) R.D.D. @2% (A) | 564 | 27,636 | |
300 | 1,100 | Prepaid Advertisement |
| 8,750 | |
|
|
| Closing Stock |
| 43,000 |
Total |
| 8,19,586 | Total |
| 8,19,586 |
1. Calculation of Debtors:
Given:
Sundry Debtors: ₹28,700
bad debt: ₹500
R.D.D. at 2% on Sundry Debtors
Calculation:
Initial Debtors:
Initial Sundry Debtors=₹28,700
Bad Debt Adjustment:
Adjusted Sundry Debtors=₹28,700−₹500=₹28,200
R.D.D. Calculation (2% on Adjusted Sundry Debtors):
R.D.D.=₹28,200×2%=₹564
Final Sundry Debtors after R.D.D. and Bad Debt:
Final Sundry Debtors=₹28,200−₹564=₹27,636
Explanation Of Adjustments:
1. Stock on hand on 31st March 2019 was valued at ₹43,000.
- The stock is valued at ₹43,000 and is shown on the Assets side of the Balance Sheet and on the credit side of the Trading A/c.
2. Uninsured goods worth ₹8,000 were stolen.
- The loss of ₹8,000 due to stolen goods is shown as a loss in the Profit & Loss A/c on the debit side and on the credit side of the Trading A/c.
3. Create R.D.D. at 2% on Sundry Debtors.
- The new R.D.D. (Provision for Doubtful Debts) is shown on the debit side of the Profit & Loss A/c and deducted from Sundry Debtors on the Balance Sheet.
4. Mr. Patil, Our Customer, became insolvent and could not pay his debts of ₹500.
- The bad debt of ₹500 is added to the Bad Debts in the Profit & Loss A/c and deducted from Sundry Debtors on the Balance Sheet.
5. Outstanding Expenses - Rent ₹800 and Salaries ₹300.
- Outstanding expenses are added to the respective expenses in the Profit & Loss A/c and shown as liabilities on the Balance Sheet.
6. Depreciation Factory Building by ₹2,500 and Furniture by ₹1,800.
- Depreciation is shown on the debit side of the Profit & Loss A/c and deducted from the respective assets on the Balance Sheet.
